Moody's rates Output Services loans B3, Caa3

Moody's Investors Service said it t affirmed Output Services Group, Inc.'s (OSG Billing Services) corporate family rating at Caa1 and probability of default rating at Caa1-PD.

Moody's also said it assigned a B3 (LGD 3) rating to the company's proposed $232 million to be issued in pound-denominated equivalent senior secured first-lien term loan and Caa3 (LGD 5) rating to the company's proposed $265 million senior secured second-lien term loan.

The agency also said it affirmed the B3 rating to the company's existing senior secured first-lien credit facilities.

The existing rating for the current senior secured second-lien term loan, which is being refinanced with proceeds from the new debt, will be withdrawn concurrent with completion of the contemplated transaction.

The proceeds will be used to repay the company's Communisis bridge facility debt issued to fund the acquisition of Communisis plc, a portion of the existing senior secured first-lien term loan debt and related fees and expenses.

The outlook is stable.

Moody's said it views the transaction positively as it addresses the near-term maturity of Output's bridge loan facility used to finance the acquisition of Communisis.

Output is broadly constrained by the company's elevated financial risk with a very high debt-to-EBITDA ratio, estimated in excess of 8x for the 12 months that ended March 31, 2019, the agency said.

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